The pandemic has led to an unexpected rise in Cloud adoption. In return, major Cloud tech giants are posting profits with the services and products they offer to the end-users. Among the top three cloud providers, Microsoft currently leads with the recent developments favoring them. However, generally, even when the minutest aspect turns unfavorable, it can be a huge letdown. In this case, it appears to be Slack’s complaint against Microsoft.
In a complaint filed with Europe’s top competition regulator, European Commission [EC], Slack has accused Microsoft of using its market dominance to undermine rivals. This is the latest development in the ongoing app wars as different service providers strive to corner the connectivity app market, with its demand already being fueled by COVID-19.
From “Not Our Competitor” to “Microsoft is Undermining Rivals!”
In a recent interview with CNBC, Slack CEO Stewart Butterfield said, “what we have seen over the past couple of months is that Teams is not a competitor to Slack.”
Butterfield also added, “when Microsoft talk about the product, they never mention the fundamentals that Slack does, and it’s been 3 plus years at this point that they’ve been bundling it, giving it away for free, and talking about us.”
What has Slack alleged in its complaint?
San Francisco-based Slack filed a complaint with the European Commission detailing, “Microsoft’s illegal and anti-competitive practice of abusing its market dominance to extinguish competition in breach of European Union competition law.”
Slack alleges that by bundling Teams with Office 365 for free, Microsoft is “force installing [Teams] for millions, blocking its removal, and hiding the true cost to enterprise customers.”
“All we want is fair competition,” said Slack General Counsel David Schellhase, who is asking the EC to “referee.” Schellhase further said, “Slack threatens Microsoft’s hold on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lock on enterprise software.”
He also stated that the legal challenge was long in the making, and could be followed by a similar action in the United States. Slack’s complaint is specific, and it is unlikely that any other company would join this case.
Is Microsoft really devouring Slack’s market share?
With millions of people working from home, Microsoft and Slack are locking horns to win over more customers. In fact, they are not alone, as many companies offering videoconferencing and communication services are ramping up and releasing new features as well as upgrades to lure the users working from home. Besides Slack, MS Teams compete with Zoom for corporate customers.
Slack revolutionized the way how people communicate and collaborate in companies, projects, and communities. Nonetheless, Microsoft is not a new tech player; it already has a large customer base and R&D that encompasses the entire product and service flow. So, it already has the essentials to test as well as bring out a profitable product.
Microsoft Teams is a collaboration and team productivity app that is an amalgam of various standalone services such as chat, file-sharing, and video conferencing, among others. It is a niche where the groundwork was already laid out by apps such as Slack and Zoom. Microsoft studied the trends and ensured that Office 365 customers need not use third-party apps for features like video conferencing. It is important to note that Teams’ video conferencing feature was released before the COVID-19 pandemic and witnessed rapid growth as organizations around the globe transitioned to work from home model.
The recent data put out by Microsoft brings forth the following observations:
- A 775 percent jump in the Cloud services in regions that have enforced social distancing or shelter in place orders.
- A very significant spike in Teams usage, which now has more than 44 million daily users. So much so, that these users accounted for over 900 million meetings and calling minutes on Teams per day in one particular week. You can read more about Teams data here.
- Windows Virtual Desktop usage has grown by more than 3 times.
- As a result of sharing COVID-19 dashboard with the common public, Government’s usage of Cloud Power BI has surged by 42 percent.
As Teams is currently bundled with Office 365, there is no distinct number for Teams’ contribution to Microsoft’s profit. However, the aforementioned numbers are clearly paving the way for Microsoft. Regardless of EC’s verdict, even if Teams is offered as a standalone product, it will be a major rival for Slack’s market share.